Facebook Apps: mere eye candy? Maybe not.

Facebook is the “next big thing” in social networking, no question. But it is also taking revolutionary steps with it’s “Facebook Apps”. Now a few weeks in, this article looks under the hood at of the new Facebook API and offers some fascinating insights into how it works and what it means.

The leadership that the Facebook team is showing here rivals anything that the large and established software and web companies have done in this decade.

Most of them are happy little widgets. The Washington Post political compass confirmed that I am, in fact, very liberal. Actually, it tells me that I am the most liberal person I know who is using the little app. I found the Political Compass because a “friend” of mine had it. I saw it, and added it to my profile. It was easy.

The previous passage highlights several innovations of the Facebook Apps. First of all, its called the Washington Post Political Compass. It is an ad for Washington Post which I quite pleased to have on my Facebook Page. Furthermore, I know of four other people that have the same app/ad. Very clever and easy advertising.

Facebook is promising economic freedom — third-party applications can run ads and sell goods and services to their hearts’ content.

The Apps are all required to pass through the Facebook network, and therefore act through that network. This is different from Myspace apps, which are independent bits of code, and like blog “widgets”, they communicate with their own server only, and have no connection with MySpace servers. In other words Facebook Apps conform to the Facebook network and use it more efficiently than blog or MySpace widgets would.

So, when my friend Betty-Sue got the Washington Post Political Compass, I saw she had through my news feed. Cool. I uploaded it. This viral expansion worked so efficiently that the Political Compass simply couldn’t hack the load, it crashed. There were far too many people hitting it at the same time. I couldn’t actually use the thing for several hours.

Facebook is providing a highly viral distribution engine for applications that plug into its platform. As a user, you get notified when your friends start using an application; you can then start using that same application with one click. At which point, all of your friends become aware that you have started using that application, and the cycle continues. The result is that a successful application on Facebook can grow to a million users or more within a couple of weeks of creation.

You hear the word viral? Crazy viral:

ILike was the first third-party application to get serious lift-off on Facebook. Quoting from ILike’s blog shortly after their launch:

“In our first 20 hours of opening doors we had 50,000 users sign up, and it is only accelerating. (10,000 users joined in the first 12 hrs. 10,000 more users in the next 3 hrs. 30,000 more users in the next 5 hrs!!)We started the system not knowing what to expect, with only 2 servers, but ready with backup. Facebook’s rabid userbase chewed up our 2 servers almost instantly. We doubled our capacity to catch up. And then we doubled it again. And again. And again. Oh crap – we ran out of servers!! Although iLike.com has a very healthy level of Web traffic, and even though about half of all the servers in our datacenter were sitting unused, idle, as backup capacity, we are now completely maxed out.

We just emailed everybody we know across over a dozen Bay Area startups, corporations, and venture firms in a desperate plea to find spare servers so we can triple our capacity for the continued onslaught. Tomorrow we are picking up over 100 servers from different companies to have them installed just to handle the weekend’s traffic. (For those who responded to our late night pleas, thank you!)”

Yesterday, about two weeks later, ILike announced that they have passed 3 million users on Facebook and are still growing — at a rate of 300,000 users per day.

When I finally did get to use it, the Washington Post App is smart enough to use my network as a comparative device. I know that, based on the poll I took, I am the most Liberal of all my “Friends” who have that App. There is something really cool about this interaction. The ability to communicate without knowing you are communicating.

To sum it up:

Metaphorically, Facebook is providing the ease and user attraction of MySpace-style embedding, coupled with the kind of integration you see with Firefox extensions, with the added rocket fuel of automated viral distribution to a huge number of potential users, and the prospect of keeping 100% of any revenue your application can generate.